The Asia/Pacific stock indexes closed divergently

The appetite for risk is limited ahead of the US open. The commodity currencies and pound have extended losses, while euro and franc are quiet after gaining for two days. Meanwhile, the severely oversold yen is ripe for a small correction, particularly after Japan's economy minister rejected criticism that his country's extraordinary fiscal and monetary stimulus programme was aimed at weakening the yen. The Asia/Pacific stock indexes closed divergently. The European bourses are little changed, while the US stock markets are lower in pre-open trading. Gold, oil and silver are down as well.

The short-term outlook for most of the foreign currencies is sideways to slightly bearish. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on most foreign currencies.

Good luck!

Overnight

Japan: The Japanese government revised its economic growth forecast upwardly. The government now expects GDP to rise 2.5% in the fiscal year starting April 2013.

Japan: An index measuring corporate service prices was down 0.4% on year in December following the downwardly revised 0.5% fall in November.

UK: The average asking price for a house was unchanged in January, property tracking website Hometrack said. That follows the 0.1% slide in December.

Eurozone: The leading economic index increased 0.4% in December after rising 0.6% in November.

Italy: The consumer confidence index decreased to 84.6 in January from 85.7 in December.

Today's economic calendar

US: Durable goods orders for December

US: Pending home sales for December

EUR – March

The LGR Model: Long since January 24

The March euro opens flat in the US after advancing for two days and reaching an 11-month high on Friday. The euro is trading in a medium-term bullish flag targeting the 1.4200 area. It is trading above the 21-day exponential moving. The euro bottomed at an over two-year low in July.

The short-term outlook is sideways. The medium-term outlook is slightly bullish and the LGR model is long.

Immediate resistance is at 1.3575. Further resistance is at 1.3605.

Initial support is at 1.3415. Further support is at 1.3355 and 1.3290.

INDICATORS

Fast stochastics: Bullish

MACD: Slightly bullish

Ichimoku: Slightly bullish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bullish

LONG-TERM: Sideways

JPY – March

The LGR Model: Short since January 24

The oversold March Japanese yen opens slightly higher after bouncing from a new near 2 1/2-year low, and it is facing correction risk on the upside. The yen is trading below the neckline of a long-term head–and-shoulders pattern and the target is the 1.0500 area. It is trading well below the 21-day exponential moving average. The yen had peaked on September 13.

The short-term outlook is sideways. The medium-term outlook is bearish and the LGR model is short.

Immediate resistance is at 1.1085. Further resistance is at 1.1160 and 1.1250.

Initial support is at 1.0925. Further support is at 1.0795.

INDICATORS

Fast stochastics: Bearish

MACD: Sideways

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bearish

LONG-TERM: Bearish

GBP – March

The LGR Model: Short since January 14

The March pound opens off a new five-month low in the US after marking on Friday. It nicked the 61.8% Fibonacci retracement of the June-January uptrend. The pound is approaching the bottom of a long-term (four-year) triangle in the 1.56 area. It is trading well below the 21-day exponential moving average and is oversold. The pound had marked a 17-month high on January 2 and bottomed on June 1.

The short-term outlook is slightly bearish. The medium-term outlook is sideways and the LGR model is short.

Immediate support is at 1.5660. Further support is at 1.5625.

Initial resistance is at 1.5828. Further resistance is at 1.5890 and 1.5950.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

CHF – March

The LGR Model: Short since January 14

The March Swiss franc opens little changed below the 21-day exponential moving average after slipping from a 10-day high on Friday. The franc is trading in a medium-term symmetrical triangle. It had marked a seven-month high on December 20 and a 19-month low on July 24.

The short-term outlook is sideways. The medium-term outlook is slightly bullish but the LGR model is short.

Immediate resistance is at 1.0865. Further resistance is at 1.0900.

Initial support is at 1.0700. Further support is at 1.0657 and 1.0535.

INDICATORS

Fast stochastics: Sideways

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways

CAD – March

The LGR Model: Short since January 18

The March Canadian dollar remains under pressure after falling for five consecutive days and reaching a six-month low on Friday and Monday. It is trading below the 50% mark of the June-September uptrend. The loonie had peaked at a 2 ½-month high on January 11. The Canadian dollar had marked a high for the uptrend on September 14 and a significant bottom on June 1.

The short-term outlook is sideways to slightly bearish. The medium-term outlook is sideways and my model is short.

Initial support is at .9870. Further support is at .9835 and .9735.

Immediate resistance is at .9985. Further resistance is at 1.0065.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

AUD – March

The LGR Model: Long since January 2

The March Australian dollar opens at a 3 1/2-week low. It is trading below the 21-day exponential moving average. The Aussie marked a new high for the uptrend on January 10.

The short-term outlook is sideways to slightly bearish. The medium-term outlook is sideways and my model is long.

Initial support is at 1.0340. Further support follows at 1.0280.

Immediate resistance is at 1.0445. Further resistance is at 1.0510 and 1.0547.

Cornelius Luca is an author and President of Luca Global Research.
Mr. Cornelius Luca has been engaged in trading and consulting about global currency markets since 1983. He has taught courses covering the foreign exchange marketplace, foreign exchange trading, foreign exchange mathematics, currency futures and options, and technical analysis at New York University, the New York Institute of Finance, and the Lubin Graduate School of Business at Pace University.

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